Tuesday, January 17, 2017

Ten Misconceptions About Working With Recruiters

After 30+ years in the business I realize that most people don’t have a clue as to what recruiters do or don’t do or can and cannot do for them. Most don't really know how recruiters work.  I thought I would clarify by debunking ten misconceptions.

1      Once your résumé is with a recruiter, they will sends it to their contacts
We constantly receive emails from candidates who request that we send their résumés out and then let them know if people want to talk to them.  We receive these instructions from even the most senior executives. 

A recruiter should never send your résumé out without your express permission.

Every candidate should maintain control of his or her résumé.  It should never be sent to any company without specific permission, in that way candidates know which companies have it.

    Emails are an effective means of communications; interviews are not necessary
Many candidates at all levels of seniority, simply feel that by sending an email with an explanation of their situation will be sufficient for a recruiter.  Truth is, smart candidates always talk to their recruiters to bring them up to date.  

If you have a previous relationship with a recruiter, you should be re-interviewed every three or four years, especially if you have had new experiences during that time. (It works both ways: beware of a recruiter who does not want to interview you.)

3      If a recruiter tells you about a job and you express interest, it is okay for them to send your résumé, even before that recruiter interviews you
Sometimes recruiters are under pressure to send résumés.  As a result, they shoot first and then aim.  You should interview with them before they send your résumé out.  During that interview you can be fully briefed on the job. You must be sure that, a) you know all about the company and the job, have read or discussed the job description and, b) you feel the job is commensurate with your goals and ambitions and, finally, c) you like and want to work with the recruiter.

4     Your recruiters will “market” you
Most recruiters work on assignment only.  They will only introduce you to a company if they have a specific assignment that is appropriate for your background and interests.  They will not just send your résumé out and see if someone responds (see # 1 above).

5     Once introduced to a client, the recruiter has done his or her job. It is not necessary to keep the recruiter informed during the process.
This is a very common error and it is made by many candidates.  A good recruiter can be your best ally while you are interviewing.  They can help solve issues and get answers to questions which may best come from a third party.  If familiar with the company, they can and should brief you on the people you are seeing. They can facilitate scheduling and, when appropriate, help negotiate agreements and contacts. 

Frankly, I hate it when a candidate goes on an interview without telling me first.  And it can be embarrassing if the client calls me to ask for the candidate’s feedback.

6     Recruiters are not lawyers and should not be involved with contract negotiations
When it comes to contracts and negotiations, many senior candidates assume that since they are dealing with a lawyer, they no longer need their recruiter.  Wrong.  A good recruiter is not a lawyer, but has lots of experience negotiating and resolving issues. They know what to look for in a contract and may be very familiar with the company you are negotiating with, often knowing what the company will or will not do, and knowing how far they can be pushed in terms of your needs.

       If a recruiter doesn’t send you out, he or she does not like you
That is nonsense of course.  You may think you are qualified for a job, but the recruiter is working against specifications that may not match your background, personality, experience or education..

It is also possible that they do not have an assignment which is appropriate for you at the time you meet them.

I have called many candidates for the first time months or even years after meeting them.

        Once you get a job, you no longer need a recruiter
Smart candidates keep in touch with their recruiters.  They give them complete information when they get a new job, including their salary, the details of their assignments and new experiences (I love people who send me emails telling me that they are taking a job, but give absolutely no detail, even the company that just hired them.  This makes it difficult to update their records and keep track of them).  Keeping recruiters up to date enables them to constantly reevaluate your background.. Many a recruiter has called and placed a candidate ten years after first meeting them because during that time they were kept up to date by the candidate.

9      Recruiters are only interested in making a placement and not in the needs of their candidates
Good recruiters work for their clients, but they cannot do a good job for their clients unless they do a good job for their candidates.  A good recruiter is mindful of the needs of the people they are working with.

1    In These days of social media, recruiters are not necessary
The problem with on-line recruiting is that you never know who is reading and screening your résumé.  Often the screeners are very junior and cannot interpret your experience.  A recruiter who has or knows of an assignment and has a personal relationship with the hiring company, may be able to enable you to get an interview.  There is no question that networking (which would include social media) has always accounted for the majority of jobs.  However, a good recruiter who knows you and the company can provide invaluable insights.

Tuesday, January 10, 2017

Three Things To Think About Agency/Client Fees

Everyone knows that fees have cut agency profits causing a lack of bonuses and profit sharing, elimination of training programs and lack of staffing.  But there are other, less obvious ways fees have hurt the business.

My dad ran a big agency.  Gumbinner-North was, at one point, the twentieth largest agency in the world.  After he retired, he warned me about fees.  In those days most agencies were still on commission from media. His words were quite prophetic. He told me that there were three problems with fees.

First, there is always someone who will undercut the fee an agency is receiving in order to win an account or keep an account.  There are many stories about agencies winning at any price and then discovering that they could not afford to service the business. (Under the commission system, there was minimal income cutting among agencies since all of them got 15%.  Fees came into being when major advertisers, particularly those that spent all or most of their budgets on network television, decided that it was unfair to be charged 15% since network was less labor intensive than other media.)  

Additionally, clients now often choose agencies based on price rather than the work or the relationship.  Sometimes new agencies are chosen based on a point or half a point, which could be considerable for a huge account.

Second, clients don’t understand fees (true to this day).  If the fee is paid monthly (most are) and there is a quiet month, clients don’t really understand that this is offset by a busy month.  Most clients don't understand how agencies work.  Consequently, many advertisers, believe that their agencies are overpaid. Most significant, under the commission system, agencies were technically paid by the media, so an agency's income did not show up as a line item in a budget.  Advertising budgets used to be set up as media and production.  Today, in addition to these two budget lines, fees are also a line item, often higher than production and it sticks out, constantly reminding clients how much money goes to their agencies and enabling clients to constantly nit-pick what is paid to their agencies.

Third, and most critical, under the commission system, agencies were paid by the media, not by their clients.  This helped keep agencies objective about their client's business and they could service their clients according to their needs.  Commissions enabled many agencies and clients to be true partners in both marketing and advertising.  Agencies could hire the best possible people to service an account since a few thousand dollars in salary was insignificant.  In fact, agencies often functioned as the marketing department of their clients.  

Today, fees have actually put clients in charge of their own business.  This is of like a lawyer representing himself.  Although my father never thought of client procurement departments, the purchasing group, sometimes over the objection of their company’s marketing and advertising people, dictates how the client should to be serviced and by whom.  I once had an account director who was about to be hired by an agency do a courtesy interview with the client.  After the interview, the client told they agency that she was too senior and they wanted to downgrade the position.  

Most fees are calculated on what is called a blended rate, the average of all the people servicing a particular client.  There can be little deviation for this amount unless the agency is willing to enter into a renegotiation.  Making matters worse, there are many cases where senior creative, account and media people are actually spelled out by name and salary in the contract. This has pretty much put the client in charge of its own business.

I am not advocating a return to commissions.  Rather, I am simply pointing out the things which should be taken into account when negotiating fees and client contracts

Tuesday, January 3, 2017

Sadly Ad Agencies No Longer Invest In Training Talent

Recently, Digiday ran an article entitled, “Paltry pay at agencies leads to millennials moonlighting”.  It reported that 44% of those between 25 and 34 in advertising have second jobs.  That is astounding, but not surprising.

Entry level pay at ad agencies is comparatively quite low.  So low, in fact that ad agencies are no longer attracting the best and brightest talent from either graduate schools or from four-year colleges.  This is not news, so it is not a new problem; it has been going on – and getting worse – for many years. Low salaries paid to juniors almost preclude those except the most dedicated (that doesn’t mean the best) from going into or staying in the business.  

In addition to low salaries, ad agencies have simply stopped investing in junior talent and it isn’t just about salaries.  There are almost no training programs. There is very little advanced training of any kind.  But it goes further. At least one of the top five New York agencies actually has a policy against its junior account people (AAE’s and AE’s) attending television and print shoots, even those which take place locally.  So how are these young executives supposed to learn the essentials of the business?

This has all been brought about because agencies have accepted rather than fighting back against the fee system, as dictated by procurement. Ad agencies, particularly the network owned shops, are so determined to win business at any cost that they have cut their margins to the point that they can barely afford to service an account once they win it. Clients are insisting on being serviced by senior people only and agencies, to their detriment, have accepted that mandate.  As we all know, the problem now is that by short-staffing and under-training juniors, seniors are forced to do work which should be done by more junior members of the team, thus often limiting the people who should be thinking about strategy to spending too much time executing.  

Since clients underrate juniors, so do their agencies.
As evidence of all this, ad agency financial people have mandated that human resources not use  recruiters for junior jobs. They just don’t care about the quality of their new, junior employees. If their young people succeed, so much the better, but if they are not good or fail, they are totally replaceable.  There is a considerable body of evidence which indicates that talent placed by a trained outside recruiter (not the contract employees hired, mostly on a temp basis to fill jobs if they are in a crunch) is of higher quality and stays longer. The attitude of the financial people is that one young person is just like another, so it doesn’t matter if we get the best talent through networking.  In many cases this is also true for senior and management jobs. 

The result is that there is a talent crisis in the business. The best young employees have to figure out their own career paths and how to get the training they want and need.  This causes additional turnover which, for ad agencies, is expensive.

Turnover is at an all-time high. Really good juniors change jobs frequently in order to increase their salaries up to a livable level. And because agencies don’t invest in training, there is low allegiance; one of the things which training programs did was to foster a sense of commitment. Advertising, even when there were training programs, always had high turnover, but there were still many employees who remained for years.  Today, that is becoming rarer.

Financial departments do not count the cost of turnover (other than possible recruitment costs) which is a non-balance sheet item:  lower productivity, training and retraining, lost client relationships are difficult to measure.

Ad agencies need to take a tougher position with their clients when negotiating fees.  Investing in people should be the number one priority.

Tuesday, December 27, 2016

Ad Agencies Often Fire Their Best Employees

Not long ago, a director of human resources sent me a person she called a star.  I asked why she would be sending me such a high quality employee.  Her response was startling.  She said that this person’s account was leaving the agency and she was so good that she wanted to help her find new work quickly. The person she sent me was an account supervisor; she was at a large agency where there were actually many, many people at her level. Surely she was better than others with her same level and title. When I asked why a star would not be placed on another account, I was told that that kind of move required too much effort.  Ouch.

About two weeks ago the same thing happened with a much more senior person.  He had been with his agency, one of the top ten, for about twelve years.  He was promoted about every two years and was responsible for running several major accounts and had been rotated to run a new business pitch; the assumption was that if the agency won the account, he would be running it.  The agency won the account.  Several months after winning it, the agency was told by the client that they wanted the account moved to another city where the agency had an office. Unfortunately, this person's personal situation preclude his relocation.  Consequently, he was terminated (in fairness to the agency, he was given six months’ notice).  This is another case of "too much trouble"; surely there is an account where someone with his stellar credentials could have been moved on to.  Stars like this person should not have to worry about their jobs.

Part of the problem is the way accounts operate under the current fee system.  Before fees, rotations were common at every level, from juniors all the way to the most senior account, creative, media and strategic leaders.  Many agencies were proud of their rotation system and it was often brought up in initial client staffing meetings.  Rotations helped employee retention and were generally good for business.  Consequently, all an agency had to do was go to the client and tell them that it was time to rotate even their most senior account people (who were moved less often than the more junior employees.  Now, under fees, the client is actually in charge of his/her own business and can fight back:  “We are quite happy with so-and-so- and we are paying for him/her”.  Difficult under these circumstances to make changes. It means that agency management, including human resources, must commit to spending time and effort to make personnel changes happen. Consequently, it is easier and requires less time and administration to let the status be quo.  

As a result of this procedure, there are some very good people out of work in advertising.

The irony is that as recruiters, we still get assignments where the client company tells us that they would prefer candidates who are currently working.  In this day and age of the "rent and employee" attitude, this policy makes no sense.  That is why I always balk when we get a job assignment and the agency tells me that they don’t want someone out of work.  Often, an out of work person may be better than those who are working.  It is a great incongruity in the business now.

Tuesday, December 20, 2016

Adventures In Advertising: Don’t Bring The Client Home

This is an amusing story of what can happen with fees paid to an advertising agency.  It is a true story of a client who was paying a fair fee to an agency. But first a short background.

Back in the late eighties, Robert Jacoby, then chairman and CEO of Ted Bates put over $100 million in his pocket when the Saatchi’s bought his agency.  He was accused of being greedy and was highly criticized over the amount of money he earned.  It certainly helped to put the nails in the coffin of agencies earning commissions as many clients felt that their agencies were overpaid and switched to fees as a result.

This is a true story of another situation where a client ended up resenting the fees it paid to one of its ad agencies.  I have been asked to keep the identity of both the agency and the client private.  
An agency chairman/CEO was attending a focus group in a nearby suburb.  As it was told to me, he decided to go because the groups were taking place only about ten minutes from his home.  In attendance were several agency people as well as two client brand managers, a client R&D person and the two or three people in the corporate new products group.  Towards the end of the afternoon, the chairman thought it would be nice to invite the group back to his home for tea and coffee.

Bad idea.  

The chairman was independently wealthy and lived in a huge home right on the Long Island Sound. It was one of those homes that ends up featured in “Living Large” and selling for millions. One of the executives from the agency warned the chairman that this was the wrong group to see his home; they were mostly junior to mid-level executives.  His home was filled with antiques and incredible and expensive artwork.  The executive who asked him not to do this thought it inappropriate for the clients to see how the chairman lived.

The chairman would hear none of it.  He called his housekeeper and asked her to set up for ten or twelve guests.  What she put out was very elaborate.

When the clients went to the home they were overwhelmed by its opulence.  As I was told this story, none of the people from the client had ever been in a home like this (true of everyone there).

The next morning at about 8:30am, the head of account management at the agency got a call from the client marketing director (who had not been there).  The conversation was startling. It went something like this, “What did Peter [made up name] do last night?  Why would he have middle to junior level executives in his home?  They had no business seeing his riches and were actually overwhelmed.  As a result, two people have already come in to my office this morning to complain that we were paying too much in fees to the agency.  Before this visit they already thought it was too high [it was].  I have no choice but to cut the fee.”

The fee was cut by several thousand dollars a month.  For the chairman, it was a very expensive lunch.

There is a lesson here.  In a service business, where fees are paid, it is probably a good idea to keep what you own and have to yourself, no matter how modestly or elaborately you live.

Wednesday, December 14, 2016

Adventures In Advertising: Getting Fired At A Christmas Party

 Because it is that time of year, I thought I would post two Christmas party stories.  One was a couple of weeks ago and was about a terrible party.  This is the second, but has a much happier ending.

Years ago I worked at a great agency, McCaffrey & McCall.  Both Jim McCaffrey and David McCall were wonderful to work for and with..  I was a Senior Vice President and ran a couple of accounts. Jim had announced his retirement.  The big mystery was who David would hire as a partner and president.  Tradition was that the agency made big announcements as a surprise at the agency annual Christmas party. It then closed for the holidays.

McCaffrey & McCall was actually one of the very first agencies to close between Christmas and New Year’s.  The party was generally given a day or two before the holidays began; it was a big, festive party, always given at a popular restaurant/club.  There was a lot of drinking, followed by lunch and whatever announcements the agency was going to make (promotions and other big news) and the party ended sometime in the afternoon.  Drinks were continued at the bar. When it was over, everyone went home for the holidays.

Jim McCaffrey had announced his retirement some months before.  David McCall, in a not so surprising move, announced the new president at the luncheon.  And with that, he introduced, Bobby Statz as the next president of the agency.  Everyone laughed.  Bob was not an advertising executive, he was not even in advertising.  He was well known to most of the agency as a comedian.  Bobby did sales meetings and the like and had performed for my clients many times.  Bob, as I recall, had an act where he was always drunk (maybe an act, maybe not) and he would memorize names of executives and insult them or otherwise abuse them in his routines.  Bob was immensely funny. But he was certainly not a president – on this day he was unshaven and poorly dressed (he actually looked that way most of the time – and it was long ago, when everyone, particularly senior executives still got dressed up for work).

Of course everyone, even those who did not know him, got it immediately that it was a joke. He managed to insult most of the senior executives and he also made funny and outrageous promises for the coming year – as I recall, a four day work week, free transportation to and from work in limousines, all raises would be 15-20%, etc.  Everyone laughed and enjoyed the performance.

After his performance, the party broke up and many of us adjourned to the bar.  Bobby joined us.  And then, while we were standing there, a man who was a media estimator approached Bobby. (Do any of you remember media estimators? They existed in the days before computerization and were responsible for costing out client media and reconciling spot TV performance vs the estimates.  They kept track of discounts, make-goods, etc.) We’ll call the estimator Andrew. He was a man in his forties, wore a toupee and was one of those clerks whose face everyone knew, but no one really talked to because he kept to himself.  He came over to Bobby and introduced himself and congratulated him with a big handshake.  We thought he was doing a gotcha on Bobby.  Statz put his arm around him and said something like, “Ah, yes, Andrew, I’ve been wanting to talk to you.”  He then took Andrew over to a corner.  They apparently had a good conversation which lasted a few minutes, but we were too busy drinking and having fun to pay any attention.

Five minutes later, Bobby came back to the bar.  Someone asked him what he had said.  Bobby said, “Oh, I fired him.”  We all laughed and went on with the party.

On the first working day of the New Year, after a week off, I was in, as always, at about 8am.  I was generally the first one in.  But on that day, I heard a lot of unusual noise coming from a nearby interior office (this was long before open space. Everyone had an office, or at least shared an office with one other, at most).  I walked over to the office to see what was happening.  There was Andrew in his office putting things in boxes.

I asked him what was going on.  With a straight and serious face, he said, “I was fired.”  I asked him what he was talking about.  He said, “Mr. Statz fired me and told me to take the holidays off but to come in today to clean out my desk.” I gulped in shock and couldn’t believe that he actually thought it was true.  Suffice to say, I was horrified.  I explained that Bob Statz was a joke, and Andrew told me I was wrong.  I realized that this poor guy had spent the entire holiday thinking he had been let go. OMG, what to do? I told him to stay put and not do anything or go anywhere.

I wasn’t sure what to do, but as I was leaving Andrew’s office, I saw Don Goss, who was an EVP and the head of client services.  He was my boss. I flew into his office and told him what had happened.  He was at the bar with us all after the party.  Don couldn’t believe what had happened.  Well, he couldn't believe it until he poked his head into Andrew's office and saw him packing his things.  He told Andrew to stay put and he suggested to me that we go right up to David McCall’s office.  Like us, David was always in early.

David, at first, didn’t believe us because it was truly impossible.  We had to convince David that he had to do something. David was horrified; he was also the world’s nicest guy. The three of us went down to Andrew’s office.  On the way down, David confessed that he had no idea what to do. Neither did we.

David explained to Andrew that it was a total miscommunication and apologized. He immediately gave him a huge raise (I don't remember how much it was, but Don and I thought Andrew was now the highest paid media estimator in the city).  Then David did the most incredible thing.  David asked Andrew to call his wife.  David took the phone, apologized to her for having a miserable holiday and then invited her to have dinner with Andrew at the Four Seasons followed by theater, with a limousine to pick her up, take them to theater and then take them home, all as guests of the agency. He told her about the raise and then told her that everyone loved her husband (David barely knew who he was).  

It was an amazing on-the-spot recovery.

It is simply an awful story with a lovely ending and I think with his raise, Andrew became the highest paid media estimator in the business.

May your holidays be wonderful and filled with love.  And may you all get a great raise.

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